First-quarter earnings on slippery ground

High inflation and a persisting slowdown are likely to result in muted earnings for key sectors in the first quarter of the current financial year.

Look for no positive surprises, say analysts, adding that the current quarter may see another low if the monsoon falls below expectations.

"Another factor that will impact earnings for many companies is the rupee fluctuation, which will lead to mark-to-market losses in the earnings," said Jagannadham Thunuguntla, strategist and head of research, SMC Global Securities.

The rupee depreciation will have its positive impact on earnings by IT companies, including bellwether Infosys which declares its results on Thursday.

"IT companies are overall expected to report healthy 30.7% and 23.7% growth in their revenue and earnings, respectively," said Angel Broking in a preview.

Automobile firms are also hit hard. Hitesh Goel and Vinay Kumar of Kotak Institutional Equities Research, said their raw material costs were expected to rise sequentially driven by 7% rise in domestic steel prices and 8% depreciation of the rupee.

But banks are expected to do better, with SBI leading the pack.

However, going forward, the performance of Indian firms will depend on policy actions by the government, said Thunuguntla.